Thungela, which was spun out of Anglo American as part of its low-carbon strategy, said in a trading statement that the export prices it has received for its coal in 2022 to date have effectively halved since last year.

“The benchmark coal price has averaged $135.47 per tonne for the year to date, compared to $270.87 per tonne for FY 2022,” the company said.  

“Seaborne coal prices have receded from record highs in 2022 and have fallen sharply since the start of the year. Following a milder winter in Europe, coupled with softer gas prices, European coal and gas stocks continued to be elevated, resulting in the redirection of coal volumes to Asia.” 

The market has hardly been unaware of the sharp decline in coal prices. Thungela’s share price was little moved on Monday, but is down by about 45% in the year to date.

Coal was one of the big commodity stories of 2022 as its surging price defied the prophets of its doom in the face of the green energy transition. For the first time since 2013, the fossil fuel last year was the top revenue earner for the world’s top 40 mining companies, according to consultancy PwC’s annual survey of the industry.

Read more in Daily Maverick: King Coal still rules as a top revenue earner for global mining companies

For producers such as Thungela, this was pay dirt. The company in March reported a threefold surge in its full-year earnings for 2022, a performance that was directly related to prices.

It would have made more were it not for the woes of Transnet, which are estimated to have cost the wider industry R30-billion in lost coal exports last year. In its latest trading update, Thungela flagged once again the “rail underperformance by Transnet Freight Rail (TFR)”.

Read more in Daily Maverick: Coal producer Thungela reports threefold surge in annual profits despite Transnet woes

“By early May 2023, TFR performance had stabilised at approximately 48Mtpa (million tonnes per annum) for the industry following a very weak start to the year. This stability was interrupted by two derailments in May which resulted in the loss of approximately 300,000 tonnes in railed volumes for Thungela. For Thungela to achieve the upper end of our export saleable production guidance range (ie 12.5 million tonnes) we require an industry run rate of 53Mtpa in the second half of the year,” Thungela said.  

So for Thungela to meet its export target, TFR needs to improve its performance significantly. Transport is one of the key areas that business leaders have identified, along with energy, crime and corruption, as requiring urgent attention.

Read more in Daily Maverick: ‘Frustrated and anxious’ business leaders step up to help SA fix energy, transport and corruption crises

On another front of state failure, Thungela said Eskom was not a material threat to its business — for now. 

“Thungela is currently not materially affected by the challenges relating to Eskom’s inability to provide a consistent supply of electricity; however, this could become an area of concern in the event that we see further deterioration in the supply of electricity,” the company said.

The company is also investing in the future.

“The board has approved the Zibulo North Shaft life extension project at a capital cost of R2.4-billion,” the trading statement said.

Coal may hardly be a “sunrise” industry, but the sun is not quite setting on it either. DM